SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Community Bancorp.
(Exact name of registrant as specified in its charter)
Vermont
(State or other jurisdiction of incorporation or organization)
03-0284070
(I.R.S. Employer Identification No.)
Derby Road, Derby, Vermont 05829 (802)334-7915
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Richard C. White, President With a copy to:
Community Bancorp. Denise J. Deschenes, Esq.
Derby Road Primmer & Piper, P.C.
P.O. Box 259, Derby, VT 05829 PO Box 159, St. Johnsbury, VT 05819
(802)334-7915 (802)748-5061
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective and
from time to time thereafter.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 check the following box. [x]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box. [x]
Calculation of Registration Fee
Proposed
Title of each Proposed maximum
class of maximum aggregate
securities to be Amount to be offering price offering Amount of
registered (1) registered per unit(2) price(2) Registration fee
Common Stock
$2.50 par value
per share 71,805 shs. $ 18.25 $1,310,441.25 $397.10
<FN>
<F01> Pursuant to Rule 416(a) of the Commission the registrant intends to
include in this registration any additional shares issued as stock
dividends or pursuant to stock splits with respect to the shares listed
in the table.
<F02> Solely for purposes of this table, and pursuant to Rule 457(c), based
on the average bid and asked prices for the Company's common stock on
December 18, 1996.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a)
of the Securities Act of 1933 or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said
section 8(a), may determine.
PROSPECTUS
COMMUNITY BANCORP.
71,805 Shares of Common Stock
(par value $2.50 per share)
______________
This Prospectus relates to the offering of up to 71,805 shares of Common
Stock, par value $2.50 per share (the "Common Stock") of Community Bancorp.,
(the "Company") by certain selling stockholders who are directors and/or
executive officers of the Company and who may be deemed to be affiliates of
the Company (the "Selling Stockholders") under applicable rules of the
Securities and Exchange Commission. See "Selling Stockholders." The Common
Stock was acquired by the Selling Stockholders from the Company in various
registered offerings, pursuant to stock dividends or pursuant to conversion
of convertible debentures of the Company. In addition, shares of the Common
Stock may have been acquired by Selling Stockholders in secondary transactions,
including purchases through brokers and privately negotiated purchases not
involving any broker or dealer. This Prospectus also relates to shares of
the Company's Common Stock that may be issued to the Selling Stockholders upon
conversion in the future of convertible debentures held by them. The Company
will not receive any of the proceeds from the sale of the Common Stock by the
Selling Stockholders.
The Common Stock may be offered by the Selling Stockholders from time
to time in negotiated transactions, at fixed prices which may be changed,
at trading prices prevailing at the time of sale, at prices related to such
prevailing trading prices or at negotiated prices. The Selling Stockholders
may effect such transactions directly with the purchaser of the stock or by
selling the Common Stock to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of the Common Stock for
whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). The Selling Stockholders may also
offer and sell the Common Stock from time to time in reliance upon applicable
exemptive provisions of the Securities Act of 1933 rather than pursuant to the
Company's registration statement relating to the Common Stock offered hereby.
See "Plan of Distribution."
The Common Stock is not traded through the National Association of
Securities Dealers Automated Quotation ("NASDAQ") system nor is it listed
for trading on any securities exchange. There is no organized public trading
market in the Common Stock and trading in the Common Stock is limited. There
can be no assurance that a public trading market will ever develop in the
future. See "Nature of Trading Market; Book Value." For information regarding
the rights of the holders of the Common Stock see "Description of Common Stock."
The Company is bearing expenses in connection with this offering in the
amount of approximately $10,000, consisting primarily of legal and accounting
charges.
FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY
EACH PROSPECTIVE INVESTOR, SEE "INVESTMENT CONSIDERATIONS."
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL AGENCY.
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY AGENCY, NOR HAS THE
COMMISSION OR ANY OTHER REGULATORY AGENCY PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
______________
The date of this Prospectus is ______________, 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files proxy statements,
reports and other information with the Securities and Exchange Commission (the
"Commission" or the "SEC"). Such proxy statements, reports and other
information may be inspected without charge at the public reference facilities
maintained at the Commission's office at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission:
Northwestern Atrium Center, 500 West Madison Street, Suite 500, Chicago,
Illinois 60621-2511; and 75 Park Place, 14th floor, New York, New York 10007.
Copies of such material may be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933 with respect to the securities offered hereby.
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and reference is hereby made to
the Registration Statement and exhibits thereto for further information with
respect to the Company and the securities to which this Prospectus relates.
Summaries of and references to various documents in this Prospectus do not
purport to be complete and in each case reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission.
The principal executive offices of the Company are located at Derby Road,
U.S. Route 5, Derby, Vermont 05829, telephone (802) 334-7915.
________________________
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the year ended December
31, 1995; and
2. The Company's Quarterly Reports on Form 10-QSB for the quarters ended
March 31, June 30, and September 30, 1996.
Any statement contained in a document incorporated by reference herein
shall be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein, or in any amendment or supplement hereto,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person (including
a beneficial owner of the Company's Common Stock) to whom a copy of this
Prospectus has been delivered, on the written or oral request of any such
person, a copy of any or all of the documents referred to above which have been
incorporated in this Prospectus by reference other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests for such copies should be directed to: Stephen P.
Marsh, Vice President - Treasurer, Community Bancorp., P.O. Box 259, Derby
Vermont 05829 (telephone (802) 334-7915).
ANNUAL REPORTS TO SECURITY HOLDERS
The Company provides and will continue to provide its shareholders with an
Annual Report not later than 120 days after the close of its fiscal year. Such
report contains audited financial information about the Company, including a
consolidated balance sheet as of the end of the fiscal year and a consolidated
income statement and statement of changes in financial position for such fiscal
year. The Company also provides its shareholders with other periodic reports
which contain unaudited financial information and with proxy solicitation
materials for its annual shareholders' meeting which contain information about
the directors and executive officers of the Company.
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
appearing elsewhere in this Prospectus or incorporated by reference herein.
THE COMPANY
Community Bancorp. (the "Company") is a Vermont corporation and registered
one-bank holding company which, through its subsidiary, Community National Bank
(the "Bank"), is engaged in commercial and consumer banking in northern Vermont.
The bank is a national bank and is a member of the Federal Reserve System and
its deposits are insured up to applicable limits by the Bank Insurance Fund,
which is administered by the Federal Deposit Insurance Corporation ("FDIC").
The Company's and the Bank's principal offices are located on U.S. Route 5,
Derby Road in Derby, Vermont. At September 30, 1996 the Company had total
consolidated assets, deposits and stockholders' equity of approximately
$208,759,297, $189,362,176 and $18,552,889, respectively.
The Company is a legal entity separate and distinct from the Bank. The
principal source of the Company's funds is dividends paid by the Bank. Various
legal restrictions limit the extent to which the Bank can supply funds to the
Company. See "INVESTMENT CONSIDERATIONS" and "REGULATION AND SUPERVISION."
THE OFFERING
Securities Offered and Purpose of the Offering. The offering relates to up to
71,805 shares of the Common Stock of the Company, $2.50 par value per share (the
"Common Stock"), which may be offered for sale from time to time by certain
stockholders, who are directors and/or executive officers of the Company and
who may be considered "affiliates" of the Company (the "Selling Stockholders")
under applicable rules of the Securities and Exchange Commission (the "SEC").
The shares included in the offering represent approximately 5.24% of the
Company's outstanding Common Stock, and have been registered for sale with the
SEC. The purpose of the registration of the shares with the SEC is to provide
on-going liquidity for the Selling Stockholders should they need or desire to
sell some or all of their shareholdings in the Company. Unlike the Company's
other shareholders, as affiliates the Selling Stockholders would otherwise be
severely limited by applicable law in their ability to sell their Common Stock,
and in some circumstances they might be effectively prohibited from selling such
stock entirely. See "SELLING STOCKHOLDERS".
Offering Price and Plan of Distribution. This offering consists of shares of
Common Stock already outstanding that are owned by the Selling Stockholders and
shares that may be issued to them in the future upon conversion of the
convertible debentures of the Company held by them. The Common Stock may be
sold by them from time to time in negotiated transactions, at fixed prices which
may be changed, at trading prices prevailing at the time of sale, at prices
related to such prevailing trading prices or at negotiated prices. The Selling
Stockholders may effect such transactions directly with the purchaser of the
Common Stock or by selling the Common Stock to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of the Common Stock for whom such broker-dealers may act as agents or to whom
they sell as principals, or both (which compensation as to a particular broker-
dealer might be in excess of customary commissions). The Selling Stockholders
may also offer and sell the Common Stock from time to time in reliance upon
applicable exemptive provisions of the Securities Act of 1933 rather than
pursuant to the Company's registration statement relating to the Common Stock
offered hereby. See "PLAN OF DISTRIBUTION" and "SELLING SHAREHOLDERS."
The individual Selling Stockholders may sell their Common Stock from time to
time in one or more transactions, or in their discretion may sell all of such
stock as a block, in a single transaction.
Use of Proceeds. All of the Common Stock offered hereby is being sold by the
Selling Stockholders, not the Company. Accordingly, the Company will not
receive any proceeds from the sale of such stock. See "SELLING STOCKHOLDERS."
Investment Considerations. Prospective purchasers of the Common Stock should
give special attention to certain factors discussed below under the caption
"INVESTMENT CONSIDERATIONS," including statutory limitations on dividend
payments, the absence of an established trading market in the Common Stock and
antitakeover provisions in the Company's Articles of Association and By-laws.
THE COMMON STOCK
The rights of the Company's stockholders are governed generally by Vermont
corporate law and the provisions of the Company's Articles of Association and
By-laws. See "DESCRIPTION OF COMMON STOCK."
Voting Rights. Shareholders are entitled to one vote per share on all matters
requiring shareholder action. See "DESCRIPTION OF COMMON STOCK."
Dividends. Shareholders are entitled to dividends when and as declared by the
Board of Directors. Historically, the Company has paid quarterly cash
dividends. See "DIVIDENDS." The Company's principal source of income for
payment of dividends is dividend payments from the Bank. National banks are
subject to statutory limitations on the amount of dividends they may pay. Bank
holding companies are also subject to certain restrictions in the payment of
dividends under certain circumstances. See "INVESTMENT CONSIDERATIONS."
Trading Market. There is no active public trading market in the Company's
Common Stock and no assurance can be given that such a market will ever develop
in the future, or if such a market develops, that it can be sustained over time.
See "INVESTMENT CONSIDERATIONS" and "NATURE OF TRADING MARKET; BOOK VALUE."
Outstanding Shares. As of September 30, 1996, there were 1,369,274 shares of
Common Stock outstanding held by approximately 767 shareholders of record. The
Company also had outstanding as of such date convertible debentures, which if
fully converted on such date would have resulted in the issuance of an
additional 25,807 shares of the Company's Common Stock. The Company also issues
additional shares from time to time pursuant to its Dividend Reinvestment Plan
and may issue shares in the future pursuant to the Company's Retirement Savings
Plan or as otherwise permitted by law. See "DESCRIPTION OF COMMON STOCK."
INVESTMENT CONSIDERATIONS
Before investing in the Common Stock offered hereby, prospective investors
should consider carefully the information presented below.
Absence of Established Trading Market.
The Common Stock is not quoted on NASDAQ nor is it listed for trading on
any securities exchange. There is no active public trading market in such
Common Stock and there can be no assurance that a trading market for the Common
Stock will ever develop in the future, or if developed, that such a trading
market would be sustained over time. The absence of an established trading
market in the Common Stock adversely affects the liquidity of an investment
in that stock inasmuch as investors who may wish or need to sell all or part
of their investment in the stock may not be able to do so, or may have less
control over the timing of such a sale. See "NATURE OF TRADING MARKET; BOOK
VALUE."
Ability to Make Dividend Payments.
Federal law limits the amount of cash dividends that the Bank may pay to
the Company and could in some circumstances restrict the amount of dividends
payable by the Company. The Company's ability to pay dividends to holders of
the Common Stock is dependent on receipt of cash dividends from the Bank.
Failure to obtain sufficient funds from the Bank to make periodic dividend
payments would therefore adversely affect the Company's ability to pay dividends
to the holders of Common Stock. See "DIVIDENDS" and "REGULATION AND
SUPERVISION."
The Board of Governors of the Federal Reserve System (the "FRB") has the
power to prohibit the payment of dividends by a bank holding company if actions
by such a company constitute an unsafe or unsound practice. The FRB has issued
a policy statement on the payment of cash dividends by bank holding companies,
which expresses the FRB's view that a bank holding company should pay cash
dividends only to the extent that the company's net income for the past year is
sufficient to cover both the cash dividends and a rate of earning retention that
is consistent with the company's capital needs, asset quality, and overall
financial condition. The FRB also indicated that it would be inappropriate for
a company experiencing serious financial problems to borrow funds to pay
dividends. FRB policy also requires that a bank holding company serve as a
source of financial strength to its subsidiary banks by standing ready to use
available resources to provide adequate capital funds to those banks during
periods of financial stress or adversity. These policies could affect the
ability of the Company to pay cash dividends in some circumstances.
The Bank's ability to make dividend payments to the Company is subject to
the Bank maintaining profitable operations. There can be no assurance that
future earnings will support dividend payments to the Company. As a national
bank, the Bank's ability to pay dividends is subject to certain legal
restrictions. Pursuant to the National Bank Act, no national bank may pay
dividends from its capital. All dividends must be paid out of net profits,
after deducting reserves for losses and bad debts. The National Bank Act
further restricts the payment of dividends out of net profits by prohibiting a
national bank from declaring a dividend on its shares of common stock until the
surplus funds equals the amount of capital stock or, if the surplus fund
does not equal the amount of capital stock, until one-tenth of a bank's net
profits for the preceding half year in the case of quarterly or semi-annual
dividends, or the preceding two half years in the case of annual dividends, are
transferred to the surplus fund.
Pursuant to federal regulations, the approval of the OCC is required prior
to the payment of a dividend if the total of all dividends declared by a
national bank in any calendar year would exceed the total of its retained net
profits for that year combined with its net profits for the two preceding years,
less any required transfers to surplus or a fund for the retirement of any
preferred stock. Further, the OCC also has authority to prohibit the payment of
dividends by a national bank when it determines such payment to be an unsafe and
unsound banking practice.
Federal law also prohibits FDIC-insured depository institutions from paying
dividends or making capital distributions that would cause the institution to
fail to meet minimum regulatory capital requirements.
Antitakeover Provisions.
The provisions described below for classification of the Board of Directors
and the availability for issuance of additional Common Stock, as well as certain
provisions of state and federal law which may prohibit acquisition of control of
the Company or the Bank without prior regulatory approval, could make it more
difficult for a person or entity to acquire control of the Company without
negotiating with the Board of Directors and could have the possible effect of
deterring an offer for the Company at a substantial premium over the current
trading price of the Company's Common Stock. See "DESCRIPTION OF COMMON STOCK."
Classified Board. The Company's Articles of Association provide for the
division of the Company's Board of Directors into three classes having staggered
terms of office, with approximately one third of the directors elected each
year. The affirmative vote of at least 75 percent of the issued and outstanding
shares is required in order to change the total number of directors fixed by the
Board within the permissible range (between 9 and 25), and in order to amend or
appeal the classification provisions.
Authorized Common Stock. The Company's Articles of Association authorize the
Company to issue up to two million shares of Common Stock, $2.50 par value per
share. As of September 30, 1996 approximately 1,369,274 shares of such Common
Stock were issued and outstanding. As of September 30, 1996 the Company had
reserved for issuance pursuant to the conversion rights under its outstanding
debentures an additional 25,807 shares of Common Stock. Although the Board has
no present intention of doing so, shares of authorized and unissued Common Stock
could be issued in one or more transactions that would make a takeover of the
Company more difficult. For example, additional shares could be issued by the
Board, without seeking shareholder approval, to dilute the stock ownership of
any person seeking to obtain control of the Company or could be privately placed
with purchasers who would support the Board in opposing a hostile takeover
attempt.
Competition, Economic Conditions and Government Regulation.
The Company and the Bank operate in an increasingly competitive environment
for banking and financial services and compete with a number of other commercial
banks, savings and loan associations, money market funds, credit unions and
other financial institutions, many of which have substantially greater financial
resources than the Company. In addition, the banking business is significantly
affected by general economic and political conditions, and by governmental
monetary and fiscal policies. Conditions such as inflation, recession,
unemployment, interest rates, short money supply, scarce natural resources, and
other factors are beyond the Company's control and could adversely affect its
profitability. Further, the Company is subject to extensive governmental
supervision, regulation and control, and there can be no assurance that future
legislation, regulations or government policy will not adversely affect the
banking industry or the operations of the Company and the Bank. See "THE
COMPANY AND THE BANK" and "REGULATION AND SUPERVISION".
THE COMPANY AND BANK
Organization and Business.
Community Bancorp. (the "Company") was organized under the laws of the
State of Vermont in 1982 and became a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, in October 1983 when it acquired
all of the voting shares of Community National Bank (the "Bank"). The Bank is
the only subsidiary of the Company and principally all of the Company's business
operations are presently conducted through it.
The Bank was organized in 1851 as the Peoples Bank, and was subsequently
reorganized as the National Bank of Derby Line in 1865. In 1975, after 110
continuous years of operation as the National Bank of Derby Line, the Bank
acquired the Island Pond National Bank and changed its name to "Community
National Bank."
Community National Bank provides a complete range of retail and commercial
banking services to the residents and businesses in northeastern Vermont. These
services include checking, savings and time deposit accounts, mortgage, consumer
and commercial loans, safe deposit and night deposit services, credit card
services, and a full line of personal fiduciary services.
Competition and Market Areas.
The Bank's seven offices are located in Orleans, Essex and Caledonia
Counties in northeastern Vermont. Its primary service area is in the towns of
Derby and Newport, Vermont, with approximately 64 percent of its total deposits
as of December 31, 1995 derived from that area. The Bank's (and the Company's)
main office is located on the Derby Road, Route 5 in Derby, Vermont.
The Bank competes in all aspects of its business with other banks and
credit unions in northern Vermont, including two of the largest banks in the
state, which maintain branch offices throughout the Bank's service area.
Historically, competition in Orleans and Essex Counties has come from The
Chittenden Trust Company and The Howard Bank, N.A., a subsidiary of Banknorth
Group, Inc., based in Burlington, Vermont. The Chittenden Trust Company
maintains a branch office in Newport, and The Howard Bank maintains one office
in Barton and one office in Orleans. The Bank also competes with the Newport
branch offices of the Passumpsic Savings Bank, based in St. Johnsbury, and the
Lyndonville Savings Bank and Trust Company, based in Lyndonville, and with two
local credit unions for deposits and consumer loans. In 1995 the Bank opened
its newest branch office, in St. Johnsbury in Caledonia County. Competitors of
that branch include the locally-based Passumpsic Savings Bank, Citizens Savings
Bank and Trust Company and Lyndonville Savings Bank and Trust Company, as well
as with the local branch offices of The Howard Bank, N.A. and the Merchants
Bank, both based in Burlington.
With recent changes in applicable banking regulations and the continued
evolution of the financial services industry, the competition for deposits and
loans has broadened to include not only traditional rivals such as mutual
savings banks and stock savings banks, but also several non-traditional rivals
such as mutual funds and brokerage firms, mortgage companies, insurance
companies and non-bank lending institutions such as finance companies. This
trend of increasing competition in the financial services industry is likely to
continue in the future.
Although competition is strong, the Bank has to date successfully responded
to that competition by offering quality products and services and by maintaining
a strong community orientation. The Bank's commitment to the communities it
serves is evidenced in various lending programs it has sponsored, such as its
1993 Community Booster Loan Program, involving more than $6 million in loans to
small businesses, farmers and individuals at low fixed rates to stimulate the
local economy, its lending activities through the Vermont Housing Finance
Agency, the U.S. Veterans' Administration and its contributions to local
charities and schools and its sponsorship of the Community Circle social club
for senior citizens who are Bank depositors and the Community Business Circle
networking group for its business customers. As a result of its strong ties to
the community the Bank's lending and investment activities are funded almost
entirely by core deposits.
Employees.
The Company does not have any employees. As of September 30, 1996, the
Bank employed approximately 93 full-time employees and 33 part-time employees.
Management of the Bank considers its employee relations to be good.
REGULATION AND SUPERVISION
Bank Holding Company Regulation.
As a registered bank holding company, the Company is subject to on-going
regulation, supervision and examination by the Board of Governors of the
Federal Reserve System, under the Bank Holding Company Act of 1956, as amended
(the "Act"). A bank holding company for example, must obtain the prior approval
of the Board before it may merge or consolidate with another company or before
it acquires all or substantially all of the assets of any bank, or acquires
ownership or control of more than 5 percent of the voting shares of a bank. In
addition, the Company is generally prohibited under the Act from engaging in, or
acquiring direct or indirect ownership or control of more than 5% of the voting
shares of any company engaged in non-banking activities unless the Federal
Reserve, by order or regulation, has found such activities to be so closely
related to banking or managing or controlling banks as to be a proper incident
thereto. Some of the activities that the Federal Reserve Board has determined
by regulation to be closely related to banking are: (1) making and servicing
loans that could be made by mortgage, finance, credit card or factoring
companies; (2) performing the functions of a trust company; (3) certain leasing
of real or personal property; (4) providing certain financial, banking or
economic data processing services; (5) except as otherwise prohibited by law,
acting as an insurance agent or broker with respect to insurance that is
directly related to the extension of credit or the provision of other financial
services or, under certain circumstances, with respect to insurance that is sold
in certain small communities in which the bank holding system maintains banking
offices; (6) acting as an underwriter for credit life insurance and credit
health and accident insurance directly related to extensions of credit by the
holding company system; (7) providing certain kinds of management consulting
advice to unaffiliated banks and non-bank depository institutions; (8)
performing real estate appraisals; (9) issuing and selling money order and
similar instruments and travelers checks and selling U.S. Savings Bonds; (10)
providing certain securities brokerage and related services for the account of
bank customers; (11) underwriting and dealing in certain government obligations
such as bankers' acceptances and certificates of deposit; (12) providing
consumer financial counselling; (13) providing tax planning and preparation
services; (14) providing check guarantee services to merchants; (15) operating
a collection agency; and (16) operating a credit bureau.
The Company does not at present engage, directly or indirectly, in any non-
banking activities, nor can any prediction be made as to which such activities,
if any, the Company may subsequently engage in or when any such activities might
be undertaken.
Unless it meets specified regulatory criteria for well-capitalized
institutions, a bank holding company must also obtain prior Federal Reserve
approval in order to purchase or redeem its own stock if the gross consideration
to be paid, when added to the net consideration paid by the company for all
purchases or redemptions by the company of its equity securities within the
preceding 12 months, will equal 10 percent or more of the company's consolidated
net worth.
Under the Riegle-Neal Interstate Banking and Efficiency Act of 1994
substantially all state law barriers to the acquisition of banks by out-of-state
bank holding companies have been eliminated effective September 29, 1995. The
law will also permit interstate branching by banks effective as of June 1, 1997,
subject to the ability of states to opt-out completely or to set an earlier
effective date. Earlier this year the Vermont legislature adopted legislation
"opting in" to interstate branching effective May 30, 1996, for banks from
states with similar branching reciprocity for Vermont banks. The Company
anticipates that the effect of the new laws may be to increase competition
within the markets in which the Company operates, although the Company cannot
predict the effect to which competition will increase in such markets or the
timing of such increase.
The Company is required to file with the Federal Reserve Board an annual
report and such additional information as the Board may require pursuant to the
Act. The Board may also make examinations of the Company and any direct or
indirect subsidiary of the Company.
The Company has registered its Common Stock under Section 12(g) of the
Securities Exchange Act of 1934 and is required to file annual and periodic
reports and proxy statements and other information with the Securities and
Exchange Commission.
The Company and the Bank as its subsidiary are considered "affiliates" for
the purposes of Section 18(j) of the Federal Deposit Insurance Act, as amended,
and Sections 23A and 23B of the Federal Reserve Act, as amended. Accordingly,
they are subject to limitations with respect to the Bank's ability to make loans
and other extensions of credit to or investments in the Company or in any other
subsidiaries that the Company may acquire. All affiliate transactions must
satisfy certain limitations and otherwise be on terms and conditions that are
consistent with safe and sound banking practices. In that regard, the Bank may
not purchase from any affiliate a low quality asset (as that term is defined in
the Federal Reserve Act). In addition, transactions by the Bank with an
affiliate must be on substantially the same terms as would be available to
non-affiliates. The Company and the Bank are also prohibited by federal banking
laws from engaging in certain tie-in arrangements in connection with any
extension of credit or lease or sale of any property or the furnishing of
services. For example, the Bank may not extend credit on the condition that the
customer obtain some additional service from the Bank or the Company (other than
certain routine banking services or relationships such as maintenance of a
deposit account), or refrain from obtaining such service from a competitor.
Bank Regulation.
The Bank is a national banking association and subject to the provisions of
the National Bank Act and federal and state statutes and rules and regulations
applicable to national banks. The primary supervisory authority for the Bank is
the Comptroller of the Currency. The Bank is subject to periodic examination by
the Comptroller and must file periodic reports with the Comptroller containing a
full and accurate statement of its affairs. The Comptroller's examinations are
designed for the protection of the Bank's depositors and not for its
shareholders. The Bank is a member of the Federal Reserve System and is subject
to applicable provisions of the Federal Reserve Act and the rules and
regulations promulgated thereunder by the Board of Governors of the Federal
Reserve System. The deposits of the Bank up to applicable limits are insured by
the Bank Insurance Fund, which is administered by the Federal Deposit Insurance
Corporation ("FDIC"). Accordingly, the Bank is also subject to regulation by
the FDIC.
The statutes and regulations administered by these agencies govern most
aspects of the Bank's business, including required reserves against deposits,
loans, investments, dividends, and the establishment of branches and other
banking facilities.
Regulatory Capital Requirements.
Bank holding companies are required to comply with the Federal Reserve
Board's risk- based capital requirements. Regulatory risk-based capital
requirements take into account the differing risk profiles of banking
organizations by assigning risk weights to both assets and off-balance-sheet
exposures. In addition, capital is divided into two tiers. Tier 1 capital
includes common stockholders' equity and qualifying preferred stock. Tier 2, or
supplementary capital, includes, subject to certain limitations, limited-life
preferred stock, mandatory convertible securities, subordinated debt and a
portion of the reserve for credit losses. Total capital is defined as the sum
of tier 1 and tier 2 capital.
Banking organizations are currently required by federal regulation to meet
a minimum total capital ratio of 8%, with at least one-half being in the form of
tier 1 capital and a minimum tier 1 capital-to-risk adjusted assets ratio of 4%.
Higher tier 1-to-risk-weighted assets and total capital ratios can be imposed on
particular institutions at the discretion of the regulatory agencies. Banking
organizations are also subject to a minimum leverage capital ratio, which is
defined as the ratio of tier 1 capital to total adjusted quarterly average
assets, of at least 3%. All but the most highly rated organizations are
expected to maintain an additional cushion of at least 1% to 2% above the stated
minimum. As of December 31, 1995 the Company's total capital ratio and tier 1
capital ratio were in excess of 19.31% and 8.86% respectively. The Company's
leverage ratio as of such date was in excess of 9%.
The Company's and the Bank's capital ratios as of December 31, 1995 not
only met the minimum regulatory capital requirements, they also met the capital
ratio aspects of the "well capitalized" category under the Federal Deposit
Insurance Corporation Improvement Act of 1991 (FDICIA) (see further discussion
of FDICIA below). The "well capitalized" minimum ratios are 10% for total
capital, 6% for tier 1 capital and 5% for leverage.
Additional information regarding the Company's historical regulatory
capital ratios is set forth in the Company's 1995 Annual Report to Shareholders,
which accompanies this Prospectus.
Company Support of Subsidiary Banks.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"), among other things, imposes liability on an institution the deposits
of which are insured by the FDIC, such as the Bank, for certain potential
obligations to the FDIC incurred in connection with other FDIC-insured
institutions under common control with such institution.
Under the National Bank Act, if the capital stock of a national bank is
impaired by losses or otherwise, the OCC is authorized to require payment of the
deficiency by assessment upon the bank's stockholders, pro rata, and to the
extent necessary, if any such assessment is not paid by any stockholder after
three months notice, to sell the stock of such stockholder to make good the
deficiency. Under Federal Reserve Board policy, a bank holding company is
expected to act as a source of financial strength to its subsidiary banks and to
commit resources to support such subsidiaries. This support may be required at
times when, absent such Federal Reserve policy, the Company may not find itself
able to provide it.
In the event of a receivership of a bank subsidiary, any obligation of such
bank to an affiliate such as a bank holding company would be subordinated. In
the event of a bank holding company's bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of a
subsidiary bank would be assumed by the bankruptcy trustee and entitled to a
priority of payment.
Community Reinvestment Act.
The Bank is subject to the federal Community Reinvestment Act ("CRA"),
which requires banks to demonstrate their commitment to serving the credit needs
of low-income residents of their communities. The Bank participates in a
variety of direct and indirect lending programs and other investments for the
benefit of the low-income residents of its communities. The Bank received a
rating of "Outstanding" at its last CRA examination conducted by the Comptroller
of the Currency.
Deposit Insurance Premium Assessments.
Under applicable federal laws and regulations, deposit insurance premium
assessments to the Bank Insurance Fund ("BIF") are based on a supervisory risk
rating system, with the most favorably rated institutions paying the lowest
premiums. The deposits of the Bank are insured under the BIF. The Bank is
currently in the most favorable deposit insurance assessment category, and pays
the statutory annual minimum deposit premium assessment of $2,000.
FDICIA.
FDICIA has provided for expanded regulation of financial institutions. The
applicability of many of its provisions is based upon an institution's capital
category in relation to the five categories established by FDICIA (for which the
banking agencies have set specific capital ratio and other requirements). The
federal banking agencies have issued regulations in a number of areas to
implement FDICIA's provisions and these regulations impose progressively more
restrictive constraints on the operations and management of banks, which are not
at least "adequately capitalized," as they move into lower capital categories.
As noted above, both the Company and the Bank have capital ratios that meet the
requirements of the "well capitalized" category under the FDICIA.
Additionally, the regulations issued by the banking agencies under FDICIA,
among other things: establish a risk-based system for deposit insurance
premiums; limit the ability of many banks to use brokered deposits; increase
requirements related to independent audits; restrict investments and activities
of state-chartered banks; set standards for real estate lending; increase
lending restrictions with respect to a bank's executive officers and directors,
and establish standards in a number of areas with respect to safety and
soundness.
It is anticipated that FDICIA, and the regulations promulgated thereunder,
will continue to result in more limitations on banking activities generally,
and increased costs for the Company, the Bank and the banking industry as a
whole because of higher FDIC assessments, and higher costs of compliance,
documentation and recordkeeping.
Effects of Government Monetary Policy.
The earnings of the Bank are affected by general and local economic
conditions and by the policies of various governmental regulatory authorities.
In particular, the Federal Reserve Board regulates money and credit conditions
and interest rates in order to influence general economic conditions, primarily
through open market operations and United States Government Securities, varying
the discount rate on member bank borrowings and setting reserve requirements
against member and nonmember bank deposits. Federal Reserve Board monetary
policies have in the past had a significant effect on the operating results of
commercial banks, including the Bank, and are expected to continue to do so in
the future.
USE OF PROCEEDS
The Common Stock offered hereby is being sold by the Selling Stockholders,
not the Company. (See "SELLING STOCKHOLDERS.") Accordingly, the Company will
not receive any of the proceeds from the sale of the Common Stock in this
Offering.
NATURE OF TRADING MARKET; BOOK VALUE
Trading Market.
The Common Stock is not traded through the NASDAQ system, nor is it listed
for trading on any securities exchange. There is at present no established
public trading market for the Company's Common Stock and no assurance can be
given that a market will develop in the future, or that if such a market were
to develop, that it could be sustained. While the brokerage firms of First
Albany Corp., Smith Barney Shearson, Dean Witter Reynolds Inc. and A.G. Edwards
generally attempt to match buyers and sellers of the Company's stock when they
receive buy or sell orders, trading is not active. In addition there are
occasional trades through other brokerage firms or as a result of private
transactions not involving any broker or dealer. A public trading market having
the desirable characteristics of depth, liquidity and orderliness depends
upon the presence in the marketplace of both willing buyers and willing sellers
of the stock at any given time and such presence is, in turn, dependent upon
the individual decisions of purchasers and sellers over which neither the
Company nor any broker or dealer has control.
The table below sets forth the ranges of high and low per share purchase
prices for the Company's Common Stock, and the trading volume, in trades
effected through First Albany Corp. (the only brokerage firm from which the
Company receives such information) during each calendar quarter for the last
three years and during the first three quarters of 1996. The information in the
table does not reflect all trades in the Common Stock during the periods shown
and may reflect as few as a single transaction during the periods reported on.
Purchase prices shown are gross prices paid by the purchasers and do not reflect
the amount received by the sellers net of any fees or commissions.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
1996
Purchase Price
High............ $17.25 $18.00 $19.00
Low............. $16.50 $17.50 $17.50
Trading Volume....... 3,945 shs. 5,062 shs. 6,709 shs.
1995
Purchase Price
High............ $17.00 $17.50 $17.50 $17.50
Low............. $16.50 $16.75 $17.00 $17.00
Trading Volume....... 4,548 shs. 7,180 shs. 3,565 shs. 3,012 shs.
1994
Purchase Price
High............ $18.00 $18.50 $19.00 $18.50
Low............. $16.50 $17.00 $17.91 $16.25
Trading Volume....... 10,445 shs. 8,513 shs. 3,845 shs. 5,480 shs.
1993
Purchase Price
High............ $14.50 $15.00 $15.50 $16.75
Low............. $13.50 $13.625 $14.50 $15.50
Trading Volume....... 12,483 shs. 10,615 shs. 7,769 shs. 4,448 shs.
Management of the Company does not know the price at which all trades were
conducted during the periods indicated and the prices set forth above might not
be indicative of the prices that might have been obtained had there been an
active, established trading market in the Common Stock. In addition past
trading prices are not necessarily indicative of future trading prices.
Book Value.
The table below shows the per share book value of the Common Stock
outstanding as of the dates indicated. Except for year-end figures, which are
based on audited financial information, the book values below are based on
unaudited financial information as of the dates indicated.
1996 1995 1994 1993
March 31............... $13.28 $12.44 $12.03 $10.81
June 30................ 13.39 12.66 12.04 11.29
September 30........... 13.55 12.82 12.14 11.45
December 31............ ------ 13.21 12.27 11.90
DIVIDENDS
The Board of Directors of the Company has customarily declared and paid
cash dividends on a quarterly basis. Quarterly cash dividends paid for the
past four years are indicated in tabular form below.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
1996 $.26 $.26 $.26 $.26
1995 $.24 $.24 $.24 $.24
1994 $.22 $.22 $.22 $.22
1993 $.20 $.20 $.20 $.20
It is the present intention of the Company's Board of Directors to continue
its past policy of declaring and paying cash dividends quarterly. Nevertheless
declaration and payment of future dividends is in the sole discretion of the
Board of Directors and the amount and frequency of such dividends, if any, will
be dependent upon many factors, including earnings, general economic conditions,
and the financial condition and capital needs of the business, as well as on
restrictions arising from federal banking laws and regulations to which the
Company and the Bank are subject. See "INVESTMENT CONSIDERATIONS."
Although the Company paid a 5% stock dividend during the first quarter of 1993,
and had previously paid stock dividends on other occasions, it does not
ordinarily declare stock dividends and no prediction can be made as to whether,
or when, any stock dividends will be paid in the future.
CAPITALIZATION
The table below sets forth the consolidated capital structure and long-term
debt of the Company and the Bank at December 31, 1995 and September 30, 1996.
Because the proceeds of the Offering contemplated in this Prospectus will be
paid to the Selling Stockholders, not the Company, the Offering will not have
any effect on the Company's capitalization.
12/31/95 09/30/96
Long Term Debt
(9% Convertible Subordinated
Debentures due August 1, 1998) 191,000 136,000
(11% Convertible Subordinated
Debentures due August 1, 2001) 74,000 65,000
12/31/95 09/30/96
Stockholders' Equity
(Common Stock, $2.50 par value)
Authorized: 2,000,000 shares
Issued: 1,359,869 (12/31/95)
1,398,638 (09/30/96) 3,399,674 3,496,596
Capital Surplus 5,513,703 5,968,568
Retained Earnings 9,056,562 9,527,226
Net Realized Loss on Marketable Equity Securities
Unrealized gain (loss) on securities available
for sale (net of tax) 50,501 681
Less Treasury Stock (1) <440,023> <440,182>
Total Stockholders' Equity 17,580,417 18,552,889
Total Stockholders' Equity and Long Term Debt 17,845,417 18,753,889
<FN>
<F01> 29,355 shares and 29,364 shares, at December 31, 1995 and September 30,
1996, respectively.
SELLING STOCKHOLDERS
All of the Selling Stockholders are currently directors and/or executive
officers of the Company. Because of their position with the Company, under
applicable rules of the SEC they may be considered to be affiliates of the
Company and therefore subject to the same limitations as the Company on the
sale of Common Stock. Generally affiliates of a Company may not sell the
stock of their company except pursuant to a registration statement covering
the shares or pursuant to an applicable exemption from the registration
requirements of federal securities laws. Although affiliates of public
companies ordinarily rely on the SEC's exemptive Rule 144 in effecting sales
of their company's stock, certain of the requirements of that rule effectively
preclude reliance on it for sales of stock (such as that of the Company) in
which there is no active public trading market.
The purpose of the registration of shares in this Offering is to provide
the Company's directors and executive officers with some measure of liquidity
for their investment in the Company, by affording them an opportunity to engage
in sales of Company stock from time to time in compliance with applicable
federal securities laws. Management believes that providing the Company's
directors and executive officers with a means by which they may make sales of
Common Stock from time to time will assist the Company in retaining and
recruiting individuals of high caliber to serve as executive officers and
directors of the Company. Further, the Company believes that investment in the
Common Stock by directors and executive officers helps to increase their
identification with shareholder interests and should be encouraged. The
registration of shares in this Offering is intended to remove the disincentive
to such investment created by the restrictions on stock transfers by affiliates.
The following table sets forth certain information regarding the Selling
Stockholders. The shares of Common Stock offered hereby were acquired by the
Selling Stockholders from the Company in various registered public offerings,
pursuant to stock dividends or pursuant to conversion rights under the Company's
9% convertible subordinated debentures. Shares of the Common Stock may also
have been acquired by Selling Stockholders in secondary transactions, including
purchases through brokers and privately negotiated purchases not involving any
broker or dealer. The convertible debentures to which some of the shares
included in the table relate were acquired by the Selling Stockholders from the
Company at the time of their original issuance in registered offerings of such
debentures. All fractional shares have been rounded to the nearest full share.
Number of Shares
Number of Shares Number of and Percentage
and Percentage of Shares of Outstanding
Name of Selling of Outstanding Common Stock Common Stock to
Stockholder and Position Common Stock Included in be Owned After
with the Company Currently Owned (1) the Offering the Offering (2)
Thomas E. Adams, 10,350 (.76%) 5,000 (3) $ 5,350 (.39%)
Director
Francis P. Allard, 3,540 (.26%) 500 (4) 3,040 (.22%)
Director
Elwood Duckless, 43,896 (3.21%) 39,465 (5) 4,431 (.32%)
Director
Stephen P. Marsh, 23,960 (1.75%) 5,000 (6) 18,960 (1.38%)
Vice President & Treasurer
Anne T. Moore, 16,578 (1.21%) 16,578 (7) -0- -0-
Director
Rosemary M. Rowe, 1,759 (.13%) 1,759 -0- -0-
Secretary
Alan A. Wing, 2,623 (.19%) 1,222 (8) 1,401 (.10%)
Vice President
Richard C. White, 23,684 (1.73%) 2,000 (9) 21,684 (1.58%)
President, Chief Executive
Officer and Director
TOTALS 126,390 71,805 54,866
<FN>
<F01> As of September 30, 1996, except for shares held indirectly by certain
of the executive officers through investment in the Company stock fund
under the Employee Savings (401(k)) plan, which are as of June 30, 1996,
the date of the most recent plan report.
<F02> Assumes the sale of all shares to which this Prospectus relates.
<F03> Includes 4,309 shares held in an IRA for Mr. Adams' benefit.
<F04> Includes 3,043 shares held by Mr. Allard jointly with his wife,.
<F05> Includes 358 shares held by Mrs. Duckless and 7,169 shares held by Mr.
Duckless jointly with his wife.
<F06> Includes 3,871 shares indirectly owned by Mr. Marsh by virtue of his
participation in the Community Bancorp. stock fund under the Company's
Retirement Savings Plan.
<F07> Includes 7,959 shares held by Mrs. Moore's husband.
<F08> Includes 194 shares Mr. Wing has the right to acquire upon conversion of
9% Convertible Subordinated Debentures of the Company held by him; and
1,420 shares indirectly owned by Mr. Wing by virtue of his participation
in the Community Bancorp. stock fund under the Company's Retirement
Savings Plan. Except for his holdings through the company's Retirement
Savings Plan, all of Mr. Wing's shares and debentures are held jointly
with his wife.
<F09> Includes 1,709 shares held in an IRA for Mr. White's benefit, 9,019
shares indirectly owned by Mr. White by virtue of his participation in
the Community Bancorp. stock fund under the Company's Retirement Savings
Plan; and 644 shares held by Mr. White jointly with his wife.
Additional Information.
The following table sets forth certain information concerning the
Company's directors and executive officers. Except for directors Jacques R.
Couture, Rosemary M. Lalime, Marcel M. Locke and Dale Wells who do not
propose to sell any of their shares in this Offering, each of the individuals
named below is a Selling Stockholder.
Director/
Executive
Officer of
Community
Name and age(1) Principal Employment Bancorp. Since
Directors, Term Expiring in 1997:
Anne T. Moore Principal Real Estate Broker, 1993
Age 53 Taylor Moore Agency, Inc.
Derby, VT
(insurance and real estate)
Elwood Duckless Past President, 1987
Age 55 Newport Electric Company
Newport, VT
Rosemary M. Lalime Principal Broker and Owner, 1985
Age 50 All Seasons Realty
Newport, VT
Directors, Term Expiring in 1998:
Francis P. Allard Retired, 1993
Age 69 Canadian National Railway
Island Pond, VT
Marcel M. Locke Proprietor, 1986
Age 57 Parkview Garage
Orleans, VT
Dale Wells President 1996
Age 50 Dale Wells Building
Contractor, Inc.
St. Johnsbury, VT
Directors, Term Expiring in 1997:
Thomas E. Adams Owner, 1986
Age 49 NPC Realty, Inc.
Holland, VT
Jacques R. Couture Dairy Farmer/Maple Producer 1992
Age 46 Westfield, VT
Richard C. White President, Chief Executive 1983
Age 50 Officer and Director,
Community Bancorp.
and Community National Bank
Derby, VT
Executive Officers:(2)
Stephen P. Marsh Vice President and Treasurer 1980
Age 48 Community Bancorp.,
Senior Vice President & Cashier,
Community National Bank
Alan A. Wing Vice President, 1980
Age 52 Community Bancorp.,
Senior Vice President,
Community National Bank
Rosemary M. Rowe Secretary, 1986
Age 55 Community Bancorp.,
Senior Vice President,
Community National Bank
<FN>
<F01> Each is a director of both the Company and the Bank. The dates
indicated in the table reflect only service on the Board of Directors
of the Company and not the Bank.
<F02> Other than Mr. White, President of the Company, who is also a director
and is previously named in the table.
PLAN OF DISTRIBUTION
The Common Stock offered hereby is not being offered through an
underwriter. Rather, the Common Stock is being offered directly by the
Selling Stockholders. The Common Stock may be sold from time to time in
negotiated transactions, at fixed prices which may be changed, at trading
prices prevailing at the time of sale, at prices related to such prevailing
trading prices or at negotiated prices. The Selling Stockholders may effect
such transactions directly with the purchaser of the stock or by selling the
Common Stock to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of the Common Stock for
whom such broker-dealers may act as agents or to whom they sell as principals,
or both (which compensation as to a particular broker-dealer might be in
excess of customary commissions.) The Selling Stockholders may also offer
and sell the Common Stock from time to time in reliance upon applicable
exemptive provisions of the Securities Act of 1933 rather than pursuant to
this registration statement.
The individual Selling Stockholders may sell their shares of Common
Stock offered hereby in multiple transactions or may sell all of such shares
as a block, in a single transaction.
DESCRIPTION OF COMMON STOCK
The rights of the Company's common shareholders are governed generally
by the Vermont Business Corporation Act (11A V.S.A. Sections 1.01 et seq.)
and by the Company's Articles of Association, as amended, and its By-Laws,
as amended and restated.
Authorized Common Stock.
The Company has authorized capital stock consisting of 2,000,000 shares
of $2.50 par value Common Stock, of which 1,369,274 shares were issued and
outstanding as of September 30, 1996, held by approximately 767 shareholders
of record, leaving 630,726 shares authorized but unissued. No other classes
of stock are authorized.
There are no present plans to issue any additional shares of the Company's
Common Stock, except pursuant to the Company's Dividend Reinvestment Plan or
as may be required upon the exercise of any conversion privileges by holders
of the Company's convertible subordinated debentures. The Company has
outstanding two classes of convertible debt securities: 11% Convertible
Subordinated Debentures due 2004 and 9% Convertible Subordinated Debentures
due 1998. Approximately 25,807 additional shares of Common Stock would be
issued and outstanding if all such Debentures outstanding as of September 30,
1996 had been converted into Common Stock of the Company based on conversion
ratios in effect as of such date. In addition, authorized but unissued shares
could, but would not necessarily, be issued in connection with any future
affiliations with other banks or companies. Although there are no present
plans for any such affiliations, the Company will continue its past policy of
exploring favorable opportunities for acquisitions or investments.
Further, shares could be issued by the Board of Directors in one or more
transactions that would make a takeover of the Company more difficult. For
example, additional shares could be issued by the Board to dilute the stock
ownership of any person seeking to obtain control of the Company or could be
privately placed with purchasers who would support the Board in opposing
a hostile takeover attempt.
Dividends.
The holders of the Company's Common Stock are entitled to receive dividends
when and as declared by the Company's Board of Directors out of funds legally
available therefor. The Company's primary source of revenue, including funds
for the payment of cash dividends, is dividends paid to the Company by the
Company's subsidiary, Community National Bank (the "Bank"). Under national
banking laws, the approval of the Comptroller of the Currency is required for
the payment of a dividend to the Company by the Bank if the total of all
dividends (including any proposed dividend) declared by the Bank in any
calendar year exceeds the total of its net profits for that year combined with
its retained net profits for the preceding two years, less any required
transfers to surplus or to a fund for the retirement of any preferred stock.
Payment of dividends by the Company to its shareholders is subject to applicable
provisions of Vermont corporate law and applicable regulations and policies of
the Federal Reserve. See "REGULATION AND SUPERVISION."
While the Company intends to continue its past policy (and that of its
predecessor, the Bank) of declaring and paying cash dividends quarterly, no
assurance can be given as to the amount or frequency of future dividends, as
they are dependent upon many factors, including earnings, general economic
conditions, and the financial condition of the business. See "DIVIDENDS."
In the past the Company has not issued stock dividends on any regular basis
and no prediction can be made as to whether any such dividends will be issued
in the future.
Voting Rights.
Holders of the Company's Common Stock are entitled to one vote per share
on all matters requiring shareholder action, including election of Directors.
Classified Board of Directors.
The Company's Articles of Association provide for a Board of Directors
consisting of not more than 25 nor fewer than 9 individuals, to be divided into
three classes having staggered terms of office, with approximately one-third of
the directors elected each year. The number of directors within the permissible
range fixed by resolution of the Board, but that number may be increased or
decreased by the affirmative vote of at least 75% of the issued and outstanding
Common shares. In addition, the affirmative vote of at least 75% of the issued
and outstanding Common shares is required in order to amend or repeal the
classification provisions. As a result of the division of the Board into three
classes, a change in composition of the whole Board would take up to three years
and change of a majority of the Directors would require two successive annual
meetings.
The provisions for classification of the Board are intended to help to
promote continuity in the management and control of the Company and to
discourage hostile attempts to takeover control of the Company by putting
persons who might contemplate a surprise takeover on notice that control of
the Board of Directors may not be obtainable in a short period of time. Those
provisions, as well as the availability for issuance of a large number of
authorized but unissued shares, and the requirements of applicable federal and
state law prohibiting changes of control of the Company or the Bank without
prior regulatory approval, could have the possible effect of deterring an offer
for the Company at a substantial premium over the current trading price of the
Company's Common Stock.
Preemptive Rights.
Shareholders of the Company do not have preemptive rights to subscribe to
additional shares of the Company's stock.
Redemption.
The shares of the Company's Common Stock are not callable by the Company.
Upon agreement with a shareholder, however, the Company may repurchase its own
shares out of funds legally available therefor. A redemption would be subject
to prior approval by the Federal Reserve Board if the gross consideration to be
paid, when added to the net consideration paid by the Company for all other
redemptions during the preceding twelve months, would equal or exceed 10% of the
Company's net worth.
Liquidation Rights.
The Company's shareholders are entitled to share, on a share-for-share
basis, in any assets distributable after payment to creditors (including holders
of the Company's convertible debentures), upon a liquidation, dissolution or
winding up of the Company.
Statutory Liability; Calls or Assessments.
The shares of the Company's Common Stock are not subject to any statutory
liability nor are they subject to any calls or assessments.
Registration Under Section 12 of Exchange Act.
The Common Stock is registered under Section 12(g) of the Securities and
Exchange Act of 1934 and in accordance with that Act the Company files with the
Securities and Exchange Commission proxy statements and annual and other
periodic reports and information.
INDEMNIFICATION
The officers, Directors, agents and employees of the Company and persons
serving as directors, officers, agents or employees of another entity at the
request of the Company are entitled to indemnification under the Articles of
Association of the Company. Generally, such persons are entitled to
indemnification against expenses incurred in connection with any suit, action
or proceeding to which they are made a party by reason of their position with
the Company.
The Company is not currently involved in any pending or threatened
litigation which might result in claims for indemnification against the Company
by any of the Company's Directors or executive officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
EXPERTS
The consolidated financial statements and schedules of the Company for the
year ended December 31, 1995, incorporated herein by reference to its Annual
Report on Form 10-KSB for the year then ended, and to its Annual Report to
Shareholders for the same period, have been examined by A.M. Peisch & Company,
independent public accountants, as indicated in their report thereon, and are
incorporated herein in reliance upon the authority of said firm as experts
in accounting and auditing.
FINANCIAL INFORMATION
This Prospectus is accompanied by, and should be read in conjunction with,
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995,
and the Company's quarterly reports on Form 10-QSB for the quarter ended
September 30, 1996, which have been incorporated herein by reference.
No person has been authorized to give any
information or to make any representations other than
as contained in or incorporated by reference in this
Prospectus, and if given or made, any such
information or representation must not be relied upon
as having been authorized by the Company. Neither
the delivery of this Prospectus nor any sale hereunder
shall under any circumstances create any implication
that there has been no change in the affairs of the
Company since any of the dates as of which
information is furnished herein or since the date
hereof. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, any of the
securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such an offer.
===============================================
Table of Contents
Page
Available Information 2
Incorporation of Certain Documents by
Reference 2
Annual Reports to Security Holders 3
Prospectus Summary 3
The Company 3
The Offering 4
The Common Stock 5
Investment Considerations 5
The Company and Bank 8
Regulation and Supervision 9
Use of Proceeds 14
Nature of Trading Market; Book Value 14
Dividends 16
Capitalization 16
Selling Stockholders 17
Plan of Distribution 21
Description of Common Stock 21
Indemnification 24
Experts 25
Financial Information 25
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COMMUNITY BANCORP.
71,805 shares of
Common Stock
par value $2.50 per share
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PROSPECTUS
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____________, 1996
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
* SEC registration fee. . . . $ 397.10
* Printing and word processing . . 500.00
* Legal fees and expenses . . 6,000.00
* Accounting fees and expenses . . 1,500.00
* Blue Sky filing fees and expenses
(including counsel fees) 0.00
* Other Expenses. . . . . . . 0.00
Total. . . . . . . . . . $ 8,397.10
* Estimated
Item 15. Indemnification of Directors and Officers
Sections 8.50 through 8.58 of the Vermont Business Corporation Act contain
provisions governing the indemnification of corporate directors and officers.
In general, the statute permits a corporation to indemnify any person who
was or is a party to or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or entity, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation. With respect to any criminal action or proceeding, the indemnified
individual must have had no reasonable cause to believe his conduct was
unlawful. With respect to actions or suits by or in the right of the
corporation, such indemnification is limited to expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit. Indemnification is not permitted
with respect to any claim, issue or matter as to which such person has been
adjudged to be liable to the corporation unless and only to the extent that the
court in which such action or suit was brought determines upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Additionally, a corporation is
required to indemnify its directors and officers against expenses to the extent
that such directors or officers have been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to above or in defense of
any claim, issue or matter therein.
Indemnification can be made by a corporation only upon a determination
made in the manner prescribed by the statute that indemnification is proper in
the circumstances because the party seeking indemnification has met the
applicable standard of conduct as set forth in the Vermont Business Corporation
Act. That statutory indemnification is not deemed to be exclusive of any other
rights to which those seeking indemnification may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise. A
corporation also has the power to purchase and maintain insurance on behalf of
any person covering any liability incurred by such person in his capacity as a
director, officer, employee or agent of the corporation, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability. The indemnification provided by the Vermont
Business Corporation Act, unless otherwise provided when authorized or ratified,
continues as to a person who has ceased to be a director, officer, employee or
agent and inures to the benefit of the heirs, executors and administrators of
such a person.
Article 12 of the Company's Articles of Association contain similar provisions
for indemnification of directors and officers.
The Company has purchased Directors and Officers Liability Insurance.
Item 16. Exhibits
(10)(i) Description of Community Bancorp. Officer Incentive Plan
(ii) Prototype Cash or Deferred Profit-Sharing Plan and Trust/Custodial
Account sponsored by First Vermont Bank and Trust Company, Basic Plan
Document #04 (February, 1993).
(iii) Nonstandardized Adoption Agreement Prototype Cash or Deferred Profit-
Sharing Plan and Trust/Custodial Account sponsored by First Vermont
Bank and Trust Company (December, 1994).
(iv) Lease dated January 6, 1994 by and between Community National
Bank as lessee and the Town of Brighton, VT as lessor, relating
to Island Pond branch office.
(v) Lease dated March 28, 1985 by and between Community National bank
as lessee and Dean M. and Barbara W. Comstock as lessors, relating
to Barton branch office, as amended by letter dated June 15, 1994.
(vi) Lease dated November 30, 1994, by and between Community National Bank
as lessee and Roger F. Ames as lessor, relating to Newport branch
office.
(vii) Lease dated April 27, 1995 between Community National Bank as lessee
and Murphy Realty Company, Inc. as lessor, relating to the St.
Johnsbury branch office.
(viii) Bid and Acceptance Documents dated June 5, July 24, and September 4,
1996, between Community National Bank as pruchaser and the State of
Vermont as seller, relating to construction and purchase of a condo-
minium in Emory A. Hebard State Office Building in Newport, Vermont.
(13) (i) Annual Report of Community Bancorp. on Form 10-KSB for the year
ended December 31, 1995. *
(ii) Quarterly Report of Community Bancorp. on Form 10-QSB for the
Quarter ended September 30, 1996.*
(23) Consent of A.M. Peisch & Company, independent public accountants.
[FN]
<F*> Previously filed with the Commission pursuant to Section 13 of the
Securities Exchange Act of 1934, and incorporated by reference herein.
The Company's SEC file number is 0-16435.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereto) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item 15 above
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person of the Registrant in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Derby, State of Vermont, on October 8, 1996.
COMMUNITY BANCORP. (Registrant)
By: /s/ Richard C. White, President
Signature and Title
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Name Title Date
/s/ Thomas E. Adams Director 10/08/96
Thomas E. Adams
/s/ Francis P. Allard Director 10/08/96
Francis P. Allard
/s/ Jacques R. Couture Director 10/08/96
Jacques R. Couture
/s/ E. Duckless Director 10/08/96
Elwood Duckless
/s/ Rosemary M. Lalime Director 10/08/96
Rosemary M. Lalime
/s/ Marcel M. Locke Director 10/08/96
Marcel M. Locke
/s/ Stephen P. Marsh Vice President and Treasurer; 10/08/96
Stephen P. Marsh Principal Financial &
Accounting Officer
/s/ Anne T. Moore Director 10/08/96
Anne T. Moore
/s/ Dale Wells Director 10/08/96
Dale Wells
/s/ Richard C. White President, Chief Executive 10/02/96
Richard C. White Officer and Director